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Act fast to lock in student-loan rates by July 1
College costs keep spiraling upward, and now the cost of borrowing to pay for higher education is about to spike, too.
Students and their parents have taken comfort in a half-decade of ultra-cheap college loans, loading up on debt to cover the bills.
About 8 million people borrowed $60 billion this year in education loans issued or guaranteed by the federal government. Now only those who act quickly will be able to keep a lid on the cost of that debt.
A combination of rising interest rates and legislative changes to the student-loan program will alter the student-loan landscape July 1.
Rates on existing Stafford loans — the bedrock government-guaranteed student loans that 44 percent of full-time undergraduates rely on to pay tuition bills — change annually and are pegged to 91-day Treasury bills.
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Borrowers with multiple student loans have less than 48 hours to consolidate their debt and possibly save thousands of dollars before interest rates jump at midnight Friday.
The consolidation option won't be a good deal for everyone, and it will require homework to determine the advantages and which lender to consolidate with. But higher education officials say it will be worthwhile for most borrowers to explore the option, even though they must act quickly in the face of confusing options.
"We're not telling anyone that they need to or that they don't need to," said Elizabeth Bickford, director of financial aid at the University of Oregon. ``We're saying, here's the opportunity. We want you to look at it, because we think most students would benefit in some way.''
A good starting place is the government Web site www.loanconsoli dation.ed.gov.